Tag Team: PMA backs Amazon in New York Tax legal fight

In many ways the Performance Marketing Alliance owes its birth to the enactment of the so called “Amazon Tax” by the state of New York. It is thus fitting that the PMA announced today it was pitching in to help Amazon in its legal battle in hopes of reversing the tax.

A Brief History of a Bad Tax

Passed in April of 2008 the Amazon Tax sets a dangerous precedent, as written it is tortuous in structure and in essence violates the Commerce Clause of the U.S. Constitution.

The first round in the legal battle went to the State of New York when Judge Eileen Bransten handed down separate dismissals against separate suits brought by Amazon and Overstock in January of 2009. Amazon appealed (pdf) the ruling on July 13, 2009.

The case is being watched closely since legislative battles in eight other states were fought this year. No less than 12 states are expected to consider ratifying such a tax (including some like California who are expected to revisit the matter) in 2010.

Interestingly even states that ratified similar legislation appear to be having second thoughts. Rhode Island General Treasurer Frank Caprio stated the following after his state passed an affiliate nexus tax:

“I looked at this issue and I do not think it’s the right idea at this time… it hurts our local business…”

A Friend of Amazon’s

Today the PMA filed a motion seeking leave to submit an amicus brief (pdf) in support of Amazon. An amicus brief, literally translated as “friend of the court”, is a motion by party who is not directly engaged in the litigation, but who believes that the court’s decision may impact its interest. The motion was filed in the New York State Supreme Court Appellate division.

The brief filed by the PMA attempts to help educate the justices on the role affiliate marketing plays as a form of advertising in order to make clear distinctions in the court’s mind between affiliates and advertisers. It also outlines how rather than generating revenue for the state of New York the statute harms thousands of local affiliates who’s business has been severely impacted due to advertisers terminating relationships with them.

According to Rebecca Madigan, Founder and Executive Director of the PMA, the goal in providing such support is to

“Spearheaded efforts to persuade state legislatures not to adopt statutes like this discriminatory New York law, which threatens the livelihood of thousands of individuals and small business owners and has the potential to strangle e-commerce with invalid regulation.”

Fight Preparation

The State of New York is expected to file a response to Amazon’s appeal and the PMA’s brief by September 16. Amazon has already promised to take this battle to the Federal courts should it prove necessary.

In the meantime the PMA is gearing to lend support in other battleground states. One of the PMA’s initiatives, according to Rebecca, is to put a “human face” on those affiliates whose businesses have been impacted by such legislation. The PMA is encouraging affiliates in New York as well as North Carolina and Rhode Island who would like to tell their stories to submit them to: rebeccaATperformancemarketingallianceDOTcom

After all it is always easier to pass a law, no matter how misguided, when legislators cannot put a face to the constituents it will hurt.